By Peter Nicholson

If you’ve been a reader of the Ottawa Giving Guide over the years, odds are you have seen my annual column and heard a lot about charity flow-through shares.

Since my firm Foundation WCPD (Wealth, Creation, Preservation & Donation) completed the first ever Canadian charity flow-through transaction in May 2006, I have spoken with thousands of major donors, foundation board members and professional fundraisers. It’s fair to say, over these 16 years, I’ve heard it all.

It’s also fair to say we’ve come a long way since 2006.

The numbers speak for themselves. More than $300 million has been created for charities using charity flows with immediate liquidity, all across Canada, with no CRA issues. We have issued over 8,000 cheques on behalf of clients through the WCPD Foundation, and just last year, we receipted more than $48 million on donations, while disbursing $38 million to charities.

There is no doubt the structure is more popular and trusted than it ever has been before.

And yet, despite its popularity, it is often misunderstood.

“Is this real?”

“Does the government know about this?”

“It seems too good to be true.”

Over 16 years of meetings, and I still occasionally hear these comments and concerns. So for my column this year, I decided to get back to basics and answer the five most burning questions I often get asked by clients and professional fundraisers.

1. Are flow-through shares risky?

On their own — without immediate liquidity — absolutely.

First introduced in 1954 (three years older than your RRSP), flows are a financial policy instrument used by junior mining companies, and facilitated by the government, to raise capital for natural resources and critical minerals through a tax deduction equal to the amount invested.

That’s a fancy way of saying, you will receive a 100 percent tax deduction on the amount you buy. But there is just one problem — traditionally, these investments end up being a homerun, or a strike out. These junior mining companies use the money you invested to drill — and hopefully find that next big discovery. But nine times out of 10, they fail. Meanwhile, investors must hold these shares for at least four months after purchase, and during that time, the stock could skyrocket, or plunge.

Our structure turns that home run or strike out into a double — every time. That’s why I often call it “the GIC of tax reduction”.

What makes our structure so special? The liquidity provider. Liquidity providers are institutional buyers of shares that understand the mining business. They are willing to assume this stock market risk. However, in return, the flow-through liquidity provider requests a discount on the shares — generally around 30 percent. Their hope is the share price doesn’t dip below that discount by the end of four months.

But that’s not your problem. When you buy the shares, you immediately donate them to charity. In turn, the shares are then instantly sold to the pre-determined liquidity provider at a discount. In the process, the donor retains that 100 percent tax deduction. Finally, the charity receives the cash proceeds from that sale to the liquidity provider and issues a charitable tax receipt to the donor, triggering a second 100 percent tax deduction on the cash value of the donation.

This whole process happens almost instantly. It is seamless for both the donor and the charity.

We all know it costs 50 cents to give a dollar, when you donate cash via a cheque. Or a better method is you donate public stock; for example. Stock that has doubled without paying a capital gain is 37 cent cost to donate a dollar, or 27 cent cost for stock that has increased 10 fold.  With the charity flow method, due to the two tax policy deductibility, it can cost as little as a penny to give a dollar to as high as a 25-cent cost, motivating donors to give more.

So are charity-flow through shares risky? With an immediately liquidity provider — absolutely not. There is no stock market risk for the donor or charity. There is one small risk related to how the mining company spends the money, which I will address later.

2. Are flows a tax loophole?

A tax loophole implies that someone is skirting the law, or bending the rules. Charity flow-through shares are the exact opposite.

The entire structure is based on two long-standing government tax policies. By definition, tax policies were created to achieve specific objectives that are important to the Canadian economy. In other words, the government want us to use them.

In this case, flow-through shares are intended to raise capital for junior mining companies. To clarify, these are companies with no revenue — they only believe there is a deposit nickel, copper or cobalt.  And the government is more than willing to provide tax breaks to Canadians that help them find out.

While you might not think about it, Canada is a world leader in mining, generating hundreds of thousands of jobs and more than $100 billion towards our annual GDP. In fact, because most of this mining occurs in the north,  it is the number one employer of Indigenous Peoples. Meanwhile, mining produces many of the minerals and raw materials we require to create products that we use in our day-to-day lives. In the last federal budget, critical minerals took center stage for their role in serving as a building blocks of renewable energy technology — a subject I will explore further below.

The charitable tax receipt speaks for itself. Since 1918, the government has offered a 100 percent tax deduction for Canadians that support charities. And why not? We are doing the government’s work. For every dollar you give to charity, that is one less dollar they need to spend to help society.

The government wants two things: more drilling, and more charitable giving. Put simply, the government is well aware of how charity flow-throughs work. It is just up to Canadians who qualify to use them.

3. Is mining exploration bad for the environment?

In the past, when you mention mining, it conjures images of our grandparents’ generation — destructive, archaic, and a face covered in soot.

But on April 7, 2022, the government opened the eyes of many Canadians when it announced the first ever Critical Minerals Strategy — a new set of laws, regulations and tax incentives to help boost the supply of critical minerals, or the building blocks of technology and green energy solutions.

Think cobalt for electric car batteries and wind turbines. Think titanium for solar panels, or copper for circuit boards and electronics. There is no path to a low-carbon future without critical minerals.

Fortunately, Canada has major deposits of critical minerals within our borders — we just need to confirm how much we have with exploration.

The government is spending $3.8 billion to boost critical mineral production and supply chains over the next 10 years, while introducing an additional 30 percent critical minerals tax credit (or 60 percent tax deduction) on charity flow-through deals that involves these precious resources. This tax credit is on top of the typical 100 percent tax deductibility you receive from a standard charity flow-through deal.

What it adds up to is not only great news for Canada’s transition to green energy, but also for our clients looking to make the biggest splash possible for their charities.

4.Why are critical minerals so important?

Nothing in life is perfect. Charity flow-through shares with an immediate liquidity provider are no exception.

There is one remote risk in this deal —the junior mining company must use the funds raised towards exploration. They cannot use it for payroll, office rent, or anything that isn’t related to the drill bit.

In all my years of business, having facilitated more than a 1,000 flow-through share transactions, I’ve had to deal with it 18 times, or 1.8 percent of the time.

And even if it happens, mining companies must sign an indemnification that they will spend the money correctly. As a result, if a company is reassessed and found in violation, our clients are made whole by a payment from the mining company.

5. Are charity flows only for centa-millionaires and billionaires?

In my discussions with clients, I think people often assume this structure is only for the super wealthy. While it is indeed a niche product, anyone with a minimum income of $250,000 per year would qualify. It could also work for certain types of corporations.

Remember, charity flow-through shares allow you to reduce your taxes and direct them to charities of your choice. Therefore, wealth is not enough. If there is no tax to pay, then charity flows are not the right fit.


For decades, Peter Nicholson has been a recognized leader in Canadian tax assisted investments, with a specialized focus on philanthropic tax planning and tax reduction. Through his work with countless donors, foundations and institutions and boards, he has helped generate in excess of $175 million for client donations. WCPD is Canada’s leader with over 500 closed charity flow-through offerings. To learn more about how we can assist your philanthropic goals, write

Previous post

Make the Most of Your Donations this Year

Next post

Argyle announces pro-bono training for charities with social justice mandates

The Editor

The Editor